NEWS / Legal News - December 2022

Minnesota Supreme Court Reverses WCCA on Attorney Fee Case

Lagasse v. Horton

FACTS
The employee, Larry Horton, sustained a work-related injury and later retained Jeremy Lagasse, of Aaron Ferguson’ firm, to represent him. Ultimately, the insurer sent a Healthcare Provider Report to the employee's treating doctor and requested a PPD rating. The treating doctor rated a 64.2% whole body permanency. Upon receipt of the HCPR, the insurer requested clarification of the rating from the doctor.

Before the treating doctor responded to the request, Lagasse filed a Claim Petition, alleging entitlement to 64.2% PPD. Defense counsel filed an Answer which denied entitlement to the claimed PPD benefits. The denial was based on the fact that clarification of the rating had not yet been received from the treating doctor. Defense counsel also arranged an IME. The IME physician rated 66.66% PPD. The employer and insurer agreed to pay the 66.66% PPD rating.

Lagasse then filed a Statement of Attorney's Fees in which he claimed entitlement to contingent fees, as well as partial reimbursement of attorney's fees pursuant to Minn. Stat. Sec. 176.081, Subd. 7 (Subd. 7 fees). The compensation judge awarded Lagasse the requested fees.

PROCEDURAL HISTORY
The Workers' Compensation Court of Appeals (WCCA) held that attorney fees were not payable. The WCCA determined that no genuine dispute existed regarding whether the employee was entitled to PPD benefits. Instead, the WCCA found that the employer and insurer could not pay the treater’s PPD rating until clarification of the rating was received.

SUPREME COURT DECISION
The Supreme Court reversed the WCCA's decision. In doing so, the Supreme Court held that for contingent fees to be payable, there must be:

(1) an actual conflict between the parties as to any portion of a claim and (2) the employer and insurer must have sufficient time and information to take a position regarding liability for the claim.

In this case, an actual conflict existed because in the Answer to the Employee's Claim Petition, the defense denied entitlement to PPD benefits. The Supreme Court also found that the employer and insurer had sufficient time to take a position regarding liability. The Court reasoned that the defense could have requested an IME regarding the PPD rating before the employee filed a Claim Petition. In the alternative, the defense could have requested an extension of time to interpose their Answer.

With regard to the award of Subd. 7 fees, the Court stated that these fees are not automatically payable whenever contingent fees are paid. Instead, Subd. 7 fees are only payable if:

(1) the employer and insurer unsuccessfully resist payment of a benefit and (2) the employee's attorney procures payment of the benefit. Because the compensation judge did not specifically address the Subd. 7 issue separately from the contingent fee issue, the issue of entitlement to Subd. 7 fees were remanded back to the compensation judge.

TAKEAWAY MESSAGE
In order to prevent paying unwarranted attorney's fees, it is essential that employers, insurers and defense counsel avoid unnecessary disputes. In this case, a simple request for an extension of time to interpose an Answer to the Employee's Claim Petition could have resulted in significant savings.

Read full decision here.